Getting A Grip On Consumption In The Festival Season

Dussehra represents the big acceleration period in consumer spending which began in different parts of the country earlier, depending on the observance of festivals. It is a common occasion for all people, as it is considered auspicious for buying gold, homes, and vehicles. This can also percolate down to home appliances and kitchenware and would play out fully by Diwali time. This mood carries on until the end of the year, as companies offer discounts to push sales. How does the picture look today?

The consumption trend so far has been quite encouraging, as gauged by the surveys carried out by the Retailers Association of India. The monthly surveys until August are indicative of some tendencies. For the country as a whole, it was up 7.2% for the five-month period, April to August. However, there has been some variation across regions. It was expectedly highest in the west, with an average growth of 8%, followed by the south, with 7.6%. North came next, with 7.4%, while it was lowest for the eastern region at 5.4%. While it is low in the east, the growth in retail sales can be expected to pick up from October onwards, as big festivals play out during this time.

The association also provides the growth picture across different product and service groups. Interestingly, the highest growth rate was recorded in the QSR segment at 10.8%. This has been the trend of late, where the current working class does spend a lot on such services, which largely include dining. There has also been mushrooming of several such outlets for delivery, which have caught on, especially in the metros and urban regions. This is a trait of Gen Z and Millennials, where it is a fashion to dine outside the home.

The second-fastest-growing sales are from the food and grocery segment at 10.2%. There are two factors working here. The first is that inflation has been growing in the food segment, which adds to the value of the turnover. Second, there has been a lot of product diversification brought in by companies in the FMCG space, which has led to wider offerings and, hence, higher sales. This particular group will continue to witness high growth going forward, as there will be a tendency for higher spending during festival time, as a lot of gifting takes place on this occasion.

The next two categories of products, with higher-than-average growth, are sales of footwear (7.8%) and apparel and clothing (7.4%). Footwear sales normally tend to be seasonal and are not smooth over the year. In fact, in 2025, for the first 4 months, growth was low at 4.8%. However, for apparel and clothing, the higher growth rate is significant. This high growth, before the festival season has even begun, means that there is a growing demand for the same, which has been due to the present generation spending a lot on clothing, more out of habit and keeping up with the Joneses. Manufacturers have capitalised on this trend and made new offerings, keeping in mind the changing tastes. The widespread reach of ecommerce has helped here, as customers have been changing the mode of purchase from physical shopping to online shopping. This can gather further traction as the tradition of buying new clothes for festivals is still strong, especially in semi-urban and rural areas.

The growth in case of electronics and consumer durables is steady at 7%, and marginally lower than the average. Here, there is always a tendency to wait for the festivals, where big discounts are offered, especially on ecommerce platforms. A double-digit growth rate is what can be expected by the end of December. Product innovation has manifested in more upgraded versions of mobile phones, with finance also being arranged for by the dealers.

The two segments that have underperformed in relative terms are jewellery and beauty products. Jewellery grew by 6.4% during the first 5 months. Here, too, it can be expected that the peak season has just arrived, with the festivals and marriages leading to demand for these products. A factor that may work against purchases could be the price of the gold. While the gold price has declined globally, rupee depreciation has put pressure on the imported price of the gold, to which a higher duty had been imposed by the government earlier in a bid to slow down imports. There could be more jewellery purchases through the exchange mode, which is what is seen when the price of gold is high. In case of beauty products, the growth was just 4.4%, which can indicate less preference for ‘looking good’.

These segments are likely to show higher numbers in the festival quarter, aided also by the wedding season, which starts in November and goes up to January. The risk factors, which have come to the fore, are twofold. The first is rising inflation, where the cost of food items in particular has increased sharply. Prices of non-food items have also started increasing, which can be a dampener in the absence of discounts offered by manufacturers. The second is the possibility of weaker rural demand in the face of drought in several states—Maharashtra, Karnataka, Andhra, and Telangana. Further, there could be lower production of some kharif crops like rice, maize, groundnut, cotton, sugarcane, and soybeans, which can affect the spending power of farmers as their income comes down.

Therefore, there can be a differential pattern of demand across regions and income classes on account of these developments. The distinction between urban and rural demand will be there. Also, across income categories, the lower income groups could be constrained in spending and may have to tighten budgets. It would need to be seen whether the momentum seen in some of the industries described earlier would be sustained under these circumstances.

The author is Chief Economist, Bank of Baroda and author of ‘Corporate Quirks: The Darker Side of the Sun’. Views are personal.